Upmarket property firm Savills announced yesterday that profits in its estate agency business plunged 88% during the first half of this year as the credit crunch continued to take its toll on the housing market.

Underlying pre-tax profits at the group's core division fell to £2.5m during the six months to June 30, compared with £20.9m the year before. Revenues were down 22% to £105.3m.

The announcement came as Nationwide reported the first double-digit fall in house prices since the housing market crisis of the early 1990s, when Britain was last in the throes of a recession.

Savills said there had been a "significant" fall in sales volumes, in the UK commercial and residential markets.

The firm, which employs about 3,000 people in Britain and 20,000 globally, said job cuts would be made in order to cope with the downturn.

"We have targeted costs reductions in a number of areas including people, marketing, travel and property costs with a particular focus on our transactional and financial services businesses, which have been most affected by the downturn," said Savills chairman Peter Smith.

The news came as the National Association of Estate Agents (NAEA) said 98% of its members blamed the government's dithering on stamp duty for the continuing downturn in the housing market.

Out of 1,188 estate agents surveyed, 98% said consumer confidence had been damaged by indecision over whether the tax would be suspended in order to boost the property market and 92% said it had created consumer concerns. Since the rumours arose this month, 56% of estate agents said they had lost at least one sale.

NAEA chief executive Peter Bolton King said: "This just isn't good enough. The housing market is in a very serious position and we need serious action.

The figures show that it is agents and consumers that are bearing the brunt of this indecision and while we need a planned and managed response from the government we also need it quickly.

"We have continually called on the government to hold a roundtable discussion to find real solutions to stamp duty, the liquidity issue, first-time buyers and repossessions.

"There is no point trying to target one area in the hope of a 'quick fix'. We need a coherent package of measures that will ease problems throughout the housing market."